5
Energy Intensity and Energy Efficiency

Energy intensity is a measure of the energy required per unit of output or activity. At a national level, the ratio of the energy consumption to GDP is often used as a measure of energy intensity. For the economy as a whole, this is a broadly useful measure to compare countries and is frequently used as a proxy for energy efficiency, but it does aggregate numerous underlying factors and thus can obscure the lessons learned on specific efficiency improvements.

Energy efficiency improves when a given level of service is provided with reduced energy inputs, or when services are enhanced for a given amount of energy input (EERE, 2007a). Efficiency improvement is generally the lowest cost method to reduce emissions, including CO2, and it also has a significant impact on consumption, thereby decreasing demand, saving money, and improving energy security. Energy efficiency can be predicted reliably and, in that respect, can be viewed as another energy resource, since it is technology-based (as opposed to conservation measures which are dependent upon behavioral changes1). Efficiency improvements also provide a shorter time frame to meet energy needs and to reduce emissions relative to other approaches, such as increased usage of renewable energy technologies. This is not meant, however, to downplay the importance of investments in renewables in the medium to long term.

The State of California has demonstrated remarkable decreases in energy demand relative to GDP growth over the last 35 years, due to improvements in energy efficiency. The Los Angeles region alone saves an estimated $700 million annually through energy-efficiency measures (Rosenfeld, 2007). Extrapolations

1

Efficiency refers to improving productivity per unit energy versus conserving a given quantity of energy.

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5
Energy Intensity and Energy Efficiency
Energy intensity is a measure of the energy required per unit of output or
activity. At a national level, the ratio of the energy consumption to GDP is often
used as a measure of energy intensity. For the economy as a whole, this is a
broadly useful measure to compare countries and is frequently used as a proxy
for energy efficiency, but it does aggregate numerous underlying factors and thus
can obscure the lessons learned on specific efficiency improvements.
Energy efficiency improves when a given level of service is provided with
reduced energy inputs, or when services are enhanced for a given amount of
energy input (EERE, 2007a). Efficiency improvement is generally the lowest cost
method to reduce emissions, including CO2, and it also has a significant impact on
consumption, thereby decreasing demand, saving money, and improving energy
security. Energy efficiency can be predicted reliably and, in that respect, can be
viewed as another energy resource, since it is technology-based (as opposed to
conservation measures which are dependent upon behavioral changes1). Effi-
ciency improvements also provide a shorter time frame to meet energy needs
and to reduce emissions relative to other approaches, such as increased usage
of renewable energy technologies. This is not meant, however, to downplay the
importance of investments in renewables in the medium to long term.
The State of California has demonstrated remarkable decreases in energy
demand relative to GDP growth over the last 35 years, due to improvements in
energy efficiency. The Los Angeles region alone saves an estimated $700 million
annually through energy-efficiency measures (Rosenfeld, 2007). Extrapolations
1Efficiency refers to improving productivity per unit energy versus conserving a given quantity of
energy.

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ENERGY FUTURES AND URBAN AIR POLLUTION
suggest that, if similar measures were employed nationwide, annual energy savings
of $20 billion would be realized along with more than $250 billion in net societal
benefits—though this would necessitate a four-fold increase in energy efficiency
investments, which currently amount to less than $2 billion annually (NAPEE,
2006). Numerous recent reviews have likewise affirmed the centrality of improved
energy efficiency in China’s drive towards sustainable development (Sinton et al.,
2005; CASS, 2006). Despite its potential, energy efficiency remains underutilized
as a way to modify energy demand in the United States (NAPEE, 2006).
This chapter looks at energy intensity and energy efficiency in the United
States and China broadly, both on the supply side, particularly in the power sec-
tor, and on the demand side. It will provide a more detailed look at some of the
most successful energy efficiency efforts.
ENERGY INTENSITY
Figure 5-1 shows the energy demand and GDP per capita for a variety of
countries. To a rough level of approximation there is a “universal” relationship
between energy and GDP, with the United States as a significant outlier, in that it
has a much higher energy consumption per capita. The good news is that, as U.S.
GDP has increased over the past 10 years, the energy consumption per capita has
remained relatively constant. China, like most of the developing world, is experi-
encing a growth in energy demand per capita as living standards increase.
Figure 5-2 indicates that energy intensity in the United States has declined
since 1985, suggesting that the United States economy as a whole has improved
its energy efficiency. However, this does not capture some fundamental shifts,
such as the structural change from a manufacturing economy (energy intensive)
towards a services economy (less energy intensive), which is not related to energy
efficiency per se.2 A newer measure, the intensity index, shown in the chart, was
developed in order to account for some of these non-efficiency changes. From
1985 to 2004, it declined from 1 to 0.9, somewhat less rapidly than E/GDP, indi-
cating an underlying improvement of efficiency of 10 percent.
In China’s case, the economy has been shifting from agricultural to industrial,
marked by strong GDP growth (Figure 5-3). China’s energy intensity declined
markedly from 1980 to 2000, but energy consumption has outpaced GDP growth
since 2000. Broadly speaking, China’s energy intensity is presently higher than
that of many developed countries, albeit at a relatively low absolute value of
energy consumption per capita. Both are rising rapidly, however, which will have
implications both domestically and internationally.
2The traditional measure of energy intensity (E/GDP) is captured by the line with the most nega-
tive slope. The Intensity Index, which attempts to account for structural, behavioral, and weather
changes unrelated to efficiency, will be used throughout this chapter since it is a better approxi-
mation of changes in energy efficiency. An explanation of this methodology is available at http://
intensityindicators.pnl.gov/methodology.stm.

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ENERGY INTENSITY AND ENERGY EFFICIENCY
FIGURE 5-4 Efficiency of U.S. coal-fired power plants as of 2002.
SOURCE: NETL, 2002.
5-4
ciencies for U.S. coal-fired utilities (also see Chapter 6, Box 6-1, for an extended
discussion of the future direction of efficient coal-based power).
fixed image
There is considerable potential for improving plant thermal efficiency in
China. Compared with the international advanced level of power generation,
Chinese coal power plants are inefficient, averaging about 30 percent efficiency.
This challenge is compounded by the rate at which such plants are being con-
structed; it is estimated that a new plant comes online every 7-10 days. In 2004, coal
consumption for power generation was about 376 g/kWh, which was 55 g/kWh
higher than that in advanced countries (Chinese Electric Power Yearbook, 2005).
This was due mainly to the use of many small, inefficient generation sets; less
than 60 percent of power generation sets had a capacity exceeding 200 MW, and
27 percent had a capacity less than 100 MW. Thus, small-scale power generation
sets have impeded China’s drive towards greater energy efficiency, although recent
efforts to close smaller inefficient plants have moved forward, and plans call for
additional closures in 2007 and beyond.
While further improvements can be achieved, China’s power plants have made
efficiency gains over the past 25 years. The standard coal consumption rate of elec-
tricity generation decreased from 398 gce/kWh in 1985 to 343 gce/kWh in 2005, an
average annual decrease of 2.8 gce/kWh. The standard coal consumption rate for

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ENERGY FUTURES AND URBAN AIR POLLUTION
total power supply also fell from 431 gce/kWh in 1985 to 370 gce/kWh in 2005,
a 3.1 gce/kWh annual reduction (China Energy Research Society, 2004,2006).
A challenge for both countries is the large number of large-capacity but older,
less efficient coal-fired plants. According to DOE’s National Energy Technology
Laboratory, many existing U.S. plants are reaching their expected lifespans and
face decisions on whether to modernize or to retire, if more stringent pollution
standards cannot be met (NETL, 2002). These older plants lack pollution controls
due to the fact that many were “grandfathered” under the Clean Air Act of 1970.
Similarly, China’s newer power plants exhibit improved but not necessarily state-
of-the-art efficiencies and, with an average lifespan of 50 years, these plants are
essentially locked in for decades.
Electricity Transmission and Distribution
As mentioned in Chapter 2, electricity transmission and distribution continue
to present challenges in terms of system losses. Transmission refers to electric-
ity moving from the power generation station to a substation. In order to reduce
losses, transmission occurs at high voltages (110 kV or above), typically via
overhead power lines. Distribution refers to electricity moving from the substation
to consumers at much lower voltage. Efficiency within these existing systems can
be improved primarily by one of three ways: increasing the transmission voltage,
decreasing transmission distances, or improving transformer efficiencies.
High-temperature superconductivity (HTS) presents the most significant
opportunity to improve efficiency in this sector. HTS cables can carry 3 to 9 times
the AC power of conventional copper cables and can be either retrofitted for
overhead lines or buried underground without significant losses (OETD, 2005).
Conventional transmission lines are seldom buried underground due to higher
costs and drastic power loss. HTS transformers also exhibit improved efficiency
at approximately half the electric loss of conventional transformers. Commercial
versions of these technologies are under development and could be available
by 2010.
Distributed Energy Systems
Distributed energy (DE) is a strategy which makes use of small, modular gen-
erating systems located close to points of use, thereby improving efficiency in the
transmission and distribution of electricity. Moreover, DE systems, particularly
because they are located in or near populated areas, are characterized by cleaner
technologies. Wind turbines and small-scale gas turbines are examples of tech-
nologies utilized in DE systems. In addition to improved efficiency, these systems
offer other advantages such as reduced peak demand charges and increased system
reliability, since they can be tied into the power grid.

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ENERGY INTENSITY AND ENERGY EFFICIENCY
Most DE systems in the United States and China currently rely on natural gas
turbines, sometimes in combination with renewable sources. In the South Coast
Air Basin (which includes Los Angeles), it was estimated that a realistic scenario
of extensive distributed energy use would require 50 percent of its power from
gas turbines, while photovoltaics and fuel cells might contribute 5 and 10 percent,
respectively (Brouwer et al., 2006). In China, there are also significant opportuni-
ties to establish DE systems based on renewable sources, particularly in remote
areas currently lacking access to an electrical grid.
Integrated Energy Systems
In terms of energy use, there are a number of opportunities to combine
currently available technologies into more efficient systems. These follow the
principles of the cascade utilization of energy, where different technologies are
arranged in a cascade way, according to their preferred energy quality (Wu, 1988;
Jin et al., 2005, 2007a). Combined-cycle systems (typically gas and steam) are
widely employed in the United States (and increasingly in China) and represent
just one of many opportunities to use energy more efficiently.
Combined Heat and Po�er (CHP) and Combined Cooling, Heating, and Po�er
(CCHP)
China is already making extensive use of CHP, particularly in its urban
areas. These systems generate electricity and convert waste heat into steam for
central heating. As of 2004, there were over 2,300 CHP units of at least 6 MW
capacity, totaling 48 GW of installed capacity, or more than 12 percent of China’s
total installed capacity, according to the China Electricity Council. CHP systems
provide energy and heat more efficiently than do separate steam turbines and
small-scale boilers and, as a result, can reduce coal consumption and its atten-
dant emissions. CHP systems provide 82 percent of steam for heating and almost
27 percent of hot water nationwide, and the National Development and Reform
Commission’s (NRDC’s) Energy Bureau has established plans to double CHP’s
share of total installed electrical capacity by 2020.
CCHP technology has also developed rapidly in recent years. These sys-
tems combine distributed electricity generation with high-efficiency utilization
of thermal energy, with the energy saving ratio as high as 20-30 percent. These
systems can take many forms based on their fuel flexibility. Using fossil fuel
(natural gas) as the major source, a CCHP system can integrate use of renewable
energy to reduce the consumption of fossil fuel. A small gas turbine can be used
as its energy supply and the system may incorporate solar energy, geothermal
energy, a heat pump, and energy storage technologies (fuel cells). The gas turbine
is used to generate electric power, and recovery of the exhausted heat is applied
to produce refrigeration or heat. Refrigeration can be generated by the combina-

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ENERGY FUTURES AND URBAN AIR POLLUTION
tion of absorption refrigeration and compression refrigeration. An absorption heat
pump and compression heat pump are integrated to ensure that the heat supply
system operates reliably even when the ambient temperature is very low.
In North China, solar energy can provide domestic hot water in summer and
can be used as a heat source for an absorption heat pump in winter. A geothermal
energy system, adopted with an absorption heat engine, acts as a heat sink in
summer and heat source in winter. Presently, there are few CCHP systems using
only renewable energy due to the expensive initial investment, low profitability,
and immature technology. However, natural gas-powered CCHP systems also face
challenges in China, due to high natural gas prices and the inability to sell power
back to the electrical grid, a feature which can help offset investment and operat-
ing costs. CCHP systems may also provide an opportunity to be combined with
desalination technologies. Desalination is generally energy intensive and requires
heat at a temperature comparable to waste heat given off from CCHP systems.
Integrating these two components into a system in coastal areas might reduce the
cost of desalinating sea water for domestic and industrial use.
Coal Gasi��cation and Polygeneration Systems
IGCC is an integration of the technologies of coal gasification, gas purifica-
tion, gas turbines, heat recovery steam generation, and steam turbines. It includes
an air separation unit if the system uses the pure oxygen gasification process. Coal
gasification is widely used in the chemical industry and most of the technologies
being adopted for power generation are mature ones. The gas turbine and steam
turbine subsystems adopt the existing technologies of oil- or natural gas-based
combined cycle, with the attendant advantages of mass production. The air separa-
tion unit can employ the technologies of chemical engineering and metallurgy as
well. At present, IGCC is mainly based on the gas turbine combined cycle and the
power supply efficiency has reached 43-45 percent; it is expected to achieve 50-52
percent. However, China’s primary interest in IGCC technology is integrating it
into polygeneration systems, producing power as well as important by-products,
including liquid fuel (F-T fuels, methanol, and DME). Cities such as Huainan are
considering gasification plants which will provide a 50-50 split between power
generation and chemical production.
Polygeneration systems are able to produce synthetic liquid fuels from coal,
natural gas, biomass, heavy oil, and coke. The amount of coke produced in China
is about 180 million tons per year, which is about half of the total coke produc-
tion in the whole world. Coke oven gas (COG) by-produced in the coke-making
process is about 36 billion cubic meters per year (0.65 EJ),4 of which about half
is currently utilized. The rest of the COG is directly burned and exhausted to the
atmosphere, which results in energy waste and pollution.
4Based on an energy conversion of 18 MJ per cubic meter of COG.

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ENERGY INTENSITY AND ENERGY EFFICIENCY
In the coal gasification-based methanol production process, composition
adjustment is required for the feed gas, because the H2/CO ratio of raw syngas is
much lower than the standard value required for methanol synthesis reaction. On
the other hand, COG is higher in H2 content (about 60 percent in volume) than
the standard value required for methanol synthesis reaction. Thus, coal syngas
and COG can be mixed to provide the proper H2/CO ratio for methanol or DME
production. Chinese engineers expect that a polygeneration system for methanol
and power production based on both COG and synthesis gas will have economic
benefits for both fuel consumption and initial investment (Jin, 2007b).
DEMAND-SIDE ENERGY INTENSITY AND EFFICIENCIES
Industry and Manufacturing
As mentioned above, the U.S. economy has been transitioning from second-
ary industries (e.g., manufacturing) to services (largely captured under “com-
mercial” activity in terms of energy use). However, the industrial sector has made
improvements in efficiency, as measured by its energy consumption divided by
its contribution to GDP. Figure 5-5 shows the total energy consumption in the
industrial sector and indicates that the sector’s energy intensity has declined by
19 percent since 1985, most of this occurring after 1993 (EERE, 2007a).
1.8
1.6
1.4
1.2
Index (1985 = 1.0)
1.0
0.8
0.6 GDP in Industry
0.4 Intensity
0.2 Energy Use
0.0
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003
Year
FIGURE 5-5 Energy intensity in the U.S. industrial sector, 1985-2004.
SOURCE: EERE, 2007a.
5-5

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0 ENERGY FUTURES AND URBAN AIR POLLUTION
As an example, Table 5-1 provides a closer look at recent gains in energy
efficiency in the U.S. iron and steel sectors. Gains made between 1998 and 2002
can be largely attributed to a decrease in coal consumption (and natural gas to a
lesser extent), offsetting a slight increase in electricity consumption. Efforts aimed
at reducing energy intensity in the U.S. industrial sector have focused on seven
energy-intensive industries (aluminum, chemicals, forest products, glass, metal
casting, mining, and steel)—though there are several additional industries (notably,
petroleum refining which accounts for 17 percent of industrial energy consump-
tion), which could benefit from energy-saving technologies (NRC, 2005).
In China, 70 percent of energy is consumed by industries (compared to 32
percent in the United States). In recent years, industrial production has accounted
for about 50 percent of GDP. Energy consumption of major industries remains
high, and per unit energy consumption for major industries (e.g., iron and steel),
was on average 40 percent higher than the international advanced level.
China has been transitioning to a heavy industrial economy since the early
1990s. The proportion of heavy industry in gross value of industrial output
increased from 50.6 percent in 1990 to 66.5 percent in 2004, and the energy
consumption for heavy industry was about three times more than that for light
industry. Between 1980 and 2000, the annual average increase ratio of energy con-
sumption for industry was 4.2 percent. The building materials, steel production,
and chemical engineering industries were the main energy consumers, accounting
for 54 percent of energy consumption for all industries in 2000 (National Energy
Strategy and Policy Report, 2004). At present, another interesting transition is
taking place. Some heavy industry is being shifted from China to countries such
as Vietnam that have lower labor costs, while China is gradually shifting to more
sophisticated, higher value-added industries. Thus, China may be beginning to
experience the same changes experienced by the United States and other devel-
oped nations over the past century.
While energy per unit of production for the main energy-intensive products
exceeds international norms, it has decreased annually. As shown in Table 5-2,
TABLE 5-1 Consumption of Energy for All Purposes per Value of Production,
1998 and 2002
Survey Years
Iron and Steel Mills 1998 2002
Total 31.4 26.6
Net Electricity 3.1 3.7
Natural Gas 9.8 8.5
Coal 13.5 10.1
NOTE: 1000 Btu per constant 2000 dollar.
SOURCE: EIA, 2006.

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ENERGY INTENSITY AND ENERGY EFFICIENCY
TABLE 5-2 Energy Consumption for Main Energy-Intensive Products
1980 1990 1995 2000 2002 2005
Energy Consumption for Steel Production 1201 997 976 898 823 741
(kgce/ton)
Total Energy Consumption for Cement 218.8 201 199.2 172 162 149
(kgce/ton)
Total Energy Consumption for Ethylene 2013 1580 1277 1097 1028 986
(kgce/ton)
NOTE: Energy Policy Research, No. 6, 2006 (Data of 2000-2005); 1 kgoe = 10,000 kcal, 1 kgce =
7,000 kcal.
SOURCE: China Energy Statistical Yearbook 2000-2002 (data before 2000).
between 1980 and 2005, the energy consumption per ton of steel production
decreased 38 percent; energy per ton of ethylene production was reduced by
51 percent, and, for cement, by about 32 percent. The gap of energy intensity for
highly energy intensive products between China and other developed countries
decreased gradually in the same period.
China’s building material industry has the highest energy consumption rate
of all industries. The amounts of coal consumption can exceed 200 Mt (6 EJ)
of standard coal per year. Among building materials, cement production is the
most highly consumptive. In 2000, energy consumption for cement accounted for
70.5 percent of total energy consumption for building materials. From 1990 to
2000, cement production rose from 210 Mt to 597 Mt, and plate glass production
increased from 80,700 kilo weight cases5 to 184,000 kilo weight cases. The pro-
duction of architectural ceramics and sanitary ceramics increased several times,
though the average consumption increased just 5.9 percent, because the energy
intensity for producing the main building materials decreased. For example, from
1990 to 2005, the coal consumption for cement per ton decreased from 201 kgce
to 149 kgce, and the consumption for plate glass per weight case decreased also
from 30 kgce to 22 kgce between 2000 and 2005 (China Energy Research Society,
2006; National Energy Strategy and Policy Report, 2004).
A major challenge for improved industrial efficiency in China is the preva-
lence of coal-fired boilers. At present, there are about 530,000 small- and medium-
sized industrial boilers in China, which consume about 25 percent of the total
coal production to heat water or generate steam for industrial and residential
heating. However, their average energy efficiency levels only lie in the range of
60-65 percent, or 10-15 percent lower than that of the international advanced level.
Pollution from industrial boilers nationwide is second only to that of power plants,
5A weight case refers to the total weight of plate glass with thickness of 2 mm and area of
10 m2, ~50 kg.

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ENERGY FUTURES AND URBAN AIR POLLUTION
1.8
1.6
1.4
1.2
Index (1985 = 1.0)
1.0
0.8
0.6
Activity Index
Energy Intensity
0.4
Energy Use
0.2
0.0
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003
Year
FIGURE 5-8 Energy intensity in the U.S. transportation sector.
SOURCE: EERE, 2007a.
5-8
Similar to the case for residential energy consumption and efficiency, the
net effects of improvements in transportation efficiency are somewhat masked
by the increase in total consumption. For example, on an energy per passenger-
mile basis, air travel is less energy intensive than is highway travel (EERE,
2007a). Therefore a modal shift from highway travel to air travel can increase
total mileage, while displaying less of an increase in energy consumed, resulting
in a decrease in energy intensity. This same logic can be applied to public trans-
portation systems, which offer even greater energy savings on a per passenger-
mile basis. These changes are considered to come under the category of “other
explanatory factors,” and are not reflected as efficiency gains or losses (which are
measured within subsectors, e.g., air travel), though their impact on total energy
consumption is noticeable.
At present, China does not have aggregate data on energy intensity in the
transportation sector. However, it is estimated that the fuel efficiency gap between
vehicles in China and in developed countries is large (National Energy Strategy
and Policy Report, 2004). China’s automobiles are thought to consume 20 per-
cent more fuel per mile, and light- and middle-duty trucks consume 25 percent
and 10 percent more, respectively. One possible reason for this is the shortage
of research and development of automobile technologies, which are 10-20 years

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ENERGY INTENSITY AND ENERGY EFFICIENCY
behind advanced countries (Lin, 2006). Older automobiles, many of which con-
sume 5-30 percent more fuel than new automobiles, account for 25 percent of
all vehicles. Ninety percent of the trucks used for freight traffic are uncovered
vehicles, which decreases their fuel economy. The number of diesel trucks is small
and the diesel fuel used is often of poor quality. Low fuel prices may also serve
as a disincentive to improving vehicle fuel efficiency. However, China’s recently
enacted fuel economy standards (discussed later), if enforced, in combination
with the fact that new vehicles will continue to supplement China’s rapidly grow-
ing fleet, will certainly improve the transportation sector’s overall efficiency in
coming years.
DEMAND-SIDE EFFICIENCY INITIATIVES
Both China and the United States have made progress in demand-side energy
efficiency initiatives. Broadly, this refers to energy management, building and
appliance standards, transportation energy efficiency policies, and other govern-
ment programs and financial incentives. As climate change and air pollution and
energy security increasingly influence energy policy, so too will the importance
of demand-side energy efficiency increase. As one review of select U.S. programs
(appliance standards, financial incentives, informational and voluntary programs,
and government energy use) reveals, demand-side improvements in efficiency can
save up to four quads of energy per year (4.2 EJ), and reduce carbon emissions
by as much as 63 million metric tons (Gillingham et al., 2004). Electric utilities
have also utilized demand-side management programs, though this peaked in
the mid-1990s, after which some utilities were deregulated and consequently cut
back or terminated such programs, which had previously been mandated (EIA,
2005). This final section looks in detail at some of the key programs in the United
States and China.
Energy Service Companies
In the United States, many energy utilities have abandoned the business of
power station operation and now focus their efforts on transmission and distribu-
tion, labeling themselves energy service companies/providers. This has paved
the way for these service providers to offer ratepayers additional options, such as
purchasing renewable or green power, typically at a higher rate. Recently, some
cities have broadened the energy management concept to treat energy efficiency
improvements as a resource in and of themselves. Rather than build new plants to
expand capacity, they seek efficiency improvements through demand-side man-
agement, which creates “virtual power plants” that obviate new construction.
Austin, Texas, can claim, perhaps, the nation’s first such virtual power plant.
The local utility made use of enforced energy efficiency building codes, rebates
for more efficient appliances, and other programs and policies intended to sig-

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ENERGY FUTURES AND URBAN AIR POLLUTION
nificantly reduce local demand for energy. Over a period of 12 years, estimated
savings totaled 550 MW, allowing the city utility to remove a coal-fired power
plant from its planning books.6 The advantages of such plants are obvious: they
are cheaper than new construction, are emissions-free, and create local jobs
(EERE, 2007b).
In China, a prototype may exist in some World Bank-sponsored pilot projects.
The World Bank’s Energy Conservation Project has established three pilot Energy
Management Centers in Shandong, Beijing, and in Liaoning; these centers have
supported and promoted several small-scale local energy-efficiency projects. The
Bank has also funded 11 global environmental facilities in China that focus on
either renewable energy or energy conservation and efficiency.
Appliance Technologies and Standards
Appliance and equipment efficiency standards have contributed substantially
to energy savings in the U.S. residential and commercial sectors. Interestingly,
because many of these standards have been implemented without contro-
versy, their effectiveness is not fully known or appreciated (Dernbach, 2007).
Refrigerators are typically the largest energy consumer in U.S. households, and
DOE-supported research led to a reduction of more than two-thirds in the average
electricity consumption of refrigerators since 1974—even as average unit sizes
increased, performance improved, and ozone-depleting substances were removed
(NRC, 2001).
Energy Star is one of the most successful current U.S. programs focused on
energy efficiency. EPA established its Energy Star program in 1992. Originally
created to promote energy-efficient computers, the program has expanded to
include more than 35 product categories for homes and businesses. Since its
beginning, American consumers have purchased more than one billion Energy
Star products, including 100,000 new homes that meet Energy Star standards.
Thousands of buildings have been upgraded through energy-efficient improve-
ment projects. EPA estimates that the Energy Star program has contributed to
savings of 100 billion kWh of electricity, prevented discharge of more than 20
million metric tons of carbon elements, and saved more than $7 billion.
China’s State Economic Trade Commission (now part of the NDRC) estab-
lished the China Green Lights Program in 1996 to promote energy-efficient
lighting technologies. The program has had success in increasing the production
and use of efficient lighting technologies, but has also been challenged by the
high initial cost of more efficient technologies and the limited quality of efficient
technology produced by China. The Efficient Lighting Institute (ELI) is an inter-
national branding system for high-quality energy-efficient lighting products. The
6More information on Austin’s innovative virtual power plant is available at http://www.austin-
chamber.org/DoBusiness/TheAustinAdvantage/Energy.html.

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ENERGY INTENSITY AND ENERGY EFFICIENCY
original ELI program tested the quality certification and labeling concept and
focused on seven countries during the period 2000 through 2003. In 2005, the
China Standard Certification Center (CSC) was commissioned by the Interna-
tional Finance Corporation, with funding from the Global Environment Facility,
to develop and expand the ELI certification and branding system globally. The
expanded ELI program is operated by a new institute, the ELI Quality Certifica-
tion Institute, which is led by CSC with assistance from a team of international
experts from Asia, North America, and Latin America.
Finally, the CFC-Free Energy-Efficient Refrigerator Project, established by
the EPA and China’s State Environmental Protection Agency (SEPA), began in
1989 to promote the manufacture and sale of CFC-free energy-efficient refrigera-
tors and, secondarily, to provide sustainable economic and environmental benefits
to refrigerator manufacturers and owners (Phillips, 2004). The project focused
on CFC substitutes research, energy-efficient design, developing prototypes, and
testing in the field. Participants included Chinese refrigerator and compressor
manufacturers, the China Ministry of Finance, the NDRC, the China State General
Administration for Quality Supervision, Inspection, and Quarantine, the Univer-
sity of Maryland, and several Chinese industry trade groups. The project focused
on “technology push” and “market pull” approaches to overcoming barriers to
the adoption of energy-efficient technologies, such as lack of awareness of ben-
efits of energy-efficient refrigerators, lack of expertise in energy-efficient design,
and dealer reluctance to sell energy-efficient products. The key products of the
project were a technical training program, a standards and labeling program, an
incentive program for refrigerator and compressor manufacturers, and programs
for retailers and customers.
The project achieved the following results:
• An increase in the production and sale of energy-efficient refrigerators
(consuming less than 55 percent of the current energy use standard) from less
than 400,000 units in 1999 to almost 5 million units in 2003;
• A majority of refrigerators produced by a number of manufacturers are
now energy-efficient products; and
• It exceeded its goals of 20 million energy-efficient units sold, a lifetime
product emissions reduction of 100 million tons of CO2 and energy savings of
66 billion kWh by a factor of 2 or more.
Building Technologies and Standards
New residential and commercial buildings in the United States are subject to
energy-efficiency standards. These standards are primarily set by individual states
through residential and commercial building codes, but updates to the codes do not
apply to existing buildings. However, there is still great opportunity in the form
of renovations and upgrades to existing structures (Dernbach, 2007). Moreover,

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a comprehensive evaluation indicates that the net realized economic benefits
associated with DOE’s energy-efficiency programs for the building sector were
approximately $30 billion (1999 dollars)—substantially exceeding the roughly
$7 billion (1999 dollars) in costs from 1978-2000 (NRC, 2001).
The Energy Star label can be applied to buildings, and is available for new
homes, renovation projects, and businesses. Buildings rating in the top 25 percent
of energy-efficient buildings are eligible, calculated through a free online Portfolio
Manager.7 Over 3,200 buildings in the United States have the Energy Star label,
consuming on average 35 percent less energy, with some exceeding 50 percent
in energy savings (Energy Star, 2007). Installing low-emissivity or selective film
windows can be a cost-effective renovation to an existing structure, which can
cut energy consumption in half. Adding reflective roofs (white or another specific
pigment to reflect near-infrared radiation) can also significantly reduce building
cooling costs and lessen the urban heat island effect. This latter technology has
applications for automobiles as well.
Green building is another movement which has taken hold in both countries,
aided in part by the U.S. Green Building Council’s Leadership in Energy and
Environmental Design (LEED) rating system. Although green building encom-
passes more than just energy resources, energy efficiency is one of its five key
areas, and among these, it provides the most economic return (Energy Star,
2006). The LEED system has been the preferred rating system for green builders
locally, nationally, and even internationally. Installing solar panels and purchasing
electricity from renewable sources will improve a building’s rating under most
systems. However, there are a series of more conventional elements, from HVAC
systems to passive heating and lighting, which dollar for dollar can have even
larger impacts on energy performance.
Vehicle Fuel Efficiency
The largest efficiency gains in the transportation sector will come from
improved fuel economy. In the United States, the need for improved fuel efficiency
arose in the wake of the 1973-1974 oil embargo. In 1975 the Energy Policy and
Conservation Act was adopted, mandating the U.S. Department of Transporta-
tion to govern increased fuel efficiency for automobiles. The result was the still
intact Corporate Average Fuel Economy (CAFE) standards. The passenger vehicle
fleet, in general, is regulated by the CAFE standards. CAFE refers to the sales
weighted average fuel economy (miles per gallon) of a manufacturer’s cars and
light trucks with gross vehicle weight ratings of less than 8,500 lbs. Fuel economy
values are evaluated using protocols developed by the EPA. Congress requires
that CAFE standards be set at the maximum feasible level, considering techno-
logical feasibility, economic practicality, and effect of other standards on fuel
7Available at http://www.energystar.gov/index.cfm?c=evaluate_performance.bus_portfoliomanager.

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ENERGY INTENSITY AND ENERGY EFFICIENCY
economy and on the need of the nation to conserve energy. In the United States,
vehicle specifications are categorized within a two-class system: cars and light
duty vehicles. A significant loophole in the standards is that light-duty vehicles
weighing more than 8,500 lbs (including many pickup trucks and sports utility
vehicles) are exempted from the standards and tend to have significantly lower
fuel economy ratings that smaller vehicles.
Tightening the CAFE standards is frequently proposed as a means of com-
bating vehicle pollution and rising fuel use in the United States. In 2002, the
U.S. National Academies examined the effectiveness and impact of the CAFE
standards and concluded they had reduced oil consumption by about 2.8 million
barrels per day (6.27 EJ per year), or about 14 percent, and contributed to reduced
emissions (NRC, 2002). Further analysis building on this study has indicated that
enhanced standards could reduce oil consumption and automobile emissions,
save drivers money (in fuel costs), but also increase GDP and create job growth
(Bezdek and Wendling, 2005). It is noted in the 2002 report, however, that other
approaches, such as higher fuel taxes, tradable credits for fuel economy improve-
ments, taxes on light-duty vehicles that fall below CAFE standards combined with
rebates for vehicles exceeding the standards, and/or standards based on vehicle
attributes, such as weight, size, or payload, might be more successful at improv-
ing fuel economy.
In 2004, the Chinese government proposed a set of vehicle fuel efficiency
standards in an attempt to reduce the country’s rising dependency on oil. Designed
to regulate China’s rapidly growing automotive industry, these standards have the
power to change the way manufacturers behave by altering vehicle production.
The Chinese standards are separated into two implementation phases: Phase 1,
which began in 2005/2006, and Phase 2, which will begin in 2008. Unlike U.S.
standards, Chinese-sold vehicles need to meet fuel-efficiency standards accord-
ing to their weight class. The Chinese standards require that each vehicle within
one of sixteen designated weight categories meet specific mpg (miles per gallon)
standards. For example, according to the 2005 standards, the heaviest vehicles
must reach 19 mpg and the lightest vehicles must achieve 38 mpg (Sauer and
Wellington, 2004). If the standards are enforced correctly, China should see an
increase in the amount of fuel-efficient and technologically advanced vehicles on
the road. The demand for small cars is continuing to grow, due to increasing gas
prices and strict vehicle fuel-efficiency standards. In the future, the demand for
smaller cars is expected to rise in China’s domestic auto industry, as the govern-
ment continues to implement the fuel efficiency standards (Li, 2006).
Figure 5-9 displays comparative fuel economies for passenger vehicles in a
number of countries. Though California is currently not permitted to enact fuel
economy standards higher than the national standard, it is estimated that the more
stringent California greenhouse gas emission standards would save up to $150
billion each year in fuel costs if adopted nationwide (Rosenfeld, 2007).

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ENERGY FUTURES AND URBAN AIR POLLUTION
55
EU
50
Japan
MPG Converted to CAFE Test Cycle
45
40
China
35 Australia
Canada California
(Pavley)
30
25
US (1) dotted lines denote proposed standards
~ (2) MPG = miles per gallon
2002 2004 2006 2008 2010 2012 2014 2016
FIGURE 5-9 Comparison of fuel economy for passenger vehicles.
NOTE: California’s standards pertain to greenhouse gas emissions and not fuel economy.
5-9
Hybrids
Hybrid electric vehicles have been commercially available since 1999 (1997
in Japan) in most markets. Their combination of an internal combustion engine
and electric motor result in significant energy-efficiency gains, generally two to
three times more efficient than conventional automobiles (EERE, 2007c). The
most common hybrids do not need to be plugged in, as their electric battery
is recharged using regenerative braking or by an on-board generator. They are
also fuel flexible; hybrids have been developed to run on gasoline, methanol,
compressed natural gas, hydrogen, or other alternative fuels.8 A deterrent to the
use of such vehicles in the United States is that the increment of initial higher
purchase cost will not be returned in the cost of fuel saved at present prices in
the lifetime of the vehicle
A new type of hybrid, the plug-in hybrid, is in the demonstration stage, and
the U.S. National Renewable Energy Laboratory is leading efforts to develop such
a vehicle, which would allow the driver to drive much longer on electric battery
8This
is not to be confused with Flex-Fuel Vehicles which are designed to run on gasoline or an
ethanol blend (E85). Rather, this is a reference to the fact that hybrids do not strictly have to be
designed to run on conventional gasoline.

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ENERGY INTENSITY AND ENERGY EFFICIENCY
power, which is cleaner and far less petroleum-consumptive. These plug-ins would
literally be plugged into the electrical grid to recharge the batteries; the fuel tank
is retained and easily filled for long trips beyond the charge of the batteries. The
primary challenge to overcome is increased battery weight and cost.
Transit Oriented Development
Transit-oriented development (TOD) is another means for increasing effi-
ciency in the transportation sector. Congestion has steadily grown in urban areas
of the United States over the past two decades, and the problem has been perhaps
more acute in Chinese cities. The response in both countries has largely been to
build more roads to accommodate the burgeoning vehicle use, but in neither case
has new construction been able to keep pace with demand. As a result, cities have
developed laterally, increasing commute times while decreasing fuel efficiency
(as a result of lower velocities), and creating challenges for more efficient public
transportation systems.
Perhaps no area demonstrates this conundrum more so than the Los Angeles
metropolitan area. Yet, even Los Angeles is incorporating TOD into its urban
planning. It announced in early 2007, plans to build a large mixed-use facility at
an existing rail station, in order to reduce congestion and personal vehicle travel
(LACMTA, 2007). Many TOD projects in the United States are developing around
existing rail stations, although they are not limited to rail transportation systems,
and indeed, in other countries, notably Latin America, similar developments are
taking place in conjunction with bus rapid transit systems.
In general, TOD is characterized by dense settlements which encourage the
use of public transit. These developments have mixed uses, all within walking
distance of public transit (TRB, 2004). By encouraging public transportation,
efficiency in the transportation sector improves as personal vehicle trips and
congestion both decrease.
REFERENCES
Bezdek, R.H. and R.M. Wendling. 2005. Potential long-term impacts of changes in US vehicle fuel
efficiency standards. Energy Policy 33:407-419.
Brouwer, J., D. Dabdub, G.S. Samuelsen, M. Carreras, and S. Vutukuru. 2006. Urban Air Quality
Impacts of Distributed Generation in the South Coast Air Basin and San Joaquin Valley.
Presented to committee on April 5, 2006, University of California, Irvine.
CASS (Chinese Academy of Social Sciences). 2006. Understanding China’s Energy Policy: Economic
Growth and Energy Use, Fuel Diversity, Energy/Carbon Intensity, and International Coopera-
tion. Background paper prepared for Stern Review on the Economics of Climate Change.
Chinese Electric Power Yearbook. 2005. China Electric Power Press.
China Energy Research Society. 2004. Energy Policy Research. No. 6.
China Energy Research Society. 2006. Energy Policy Research. No. 6.

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